LEGAL
Without question, the role of “legal operations professional” is growing more common among corporate legal departments.1 However, with more companies hiring individuals to perform specific legal operations roles,2 there are still a large number of corporate legal departments that do not have a legal operations team.3 For general counsel looking to build a legal operations team, or those that would like to improve the abilities of their current team, this article lays out a six-step approach to successfully develop, structure, and grow a legal operations function.
Start with your strategy. Identify the benefits you expect your business to realize by making the investment in legal operations. Consider these four benefits as a starting point:
Process efficiency
Many legal departments report that, while their workloads are increasing, their annual budgets are remaining flat. This trend amplifies the need for a legal operations team to facilitate more efficient legal processes within the company. Many companies find that better legal processes result in significant ROI and significantly improve the delivery of legal services to the business.
Risk mitigation
As regulatory complexity increases (including the potential for personal liability among corporate officers for regulatory breaches), compliance is no longer a legal department issue; it is a challenge that needs to be addressed across the business. Enter one key legal operations function: knowledge management. The role of knowledge management is to “(e)nable efficiencies by creating seamless access to legal and department institutional knowledge through the organization and centralization of key templates, policies, processes, memos, and other learnings.”4
Cost savings
With every inevitable economic downturn comes additional scrutiny over the legal department’s outside counsel spend. In anticipation of (or reaction to) these pressures, many legal departments are moving from a decentralized vendor relationship model to a centralized vendor management program headed by the legal operations function. With these programs comes the objective to increase the value received from legal vendors while maintaining or decreasing outside legal spend.
Business intelligence
With all the systems used by legal departments to manage work, the limitation on business intelligence is often the ability to synthesize and analyze the data in a meaningful way. As legal departments add financial analysts in legal operations to their staff of paralegals and lawyers, they enable data-driven decision making.
These benefits are just the beginning. For a greater understanding of the typical competencies of a legal operations function, visit cloc.org/what-is-legal-operations.
Once you have outlined the strategy, move to organizational structure. It is imperative to think about the long-term plan for your legal operations team. To help with this, consider the “Legal Operations Maturity Model” that was developed by HBR Consulting and Elevate Services in collaboration with CLOC. This model outlines three maturity phases: Foundational, Advanced, and Mature.
Foundational
Think of a small legal department that starts with a solo general counsel. As that department grows, the general counsel adds resources to her team: an administrative assistant, lawyers, and a growing team of outside counsel. This generally results in the need for an e-billing system, which is key for managing outside counsel spend and gaining greater access to business intelligence. In implementing such a system, many legal departments venture into legal operations (perhaps without even knowing it) by adding an e-billing specialist to administer the system and implement internal and external matter management and billing policies.
Advanced
As that department grows, it eventually comes to the point where a legal operations manager is needed to achieve its strategic objectives. Note that the e-billing specialist reports to the legal operations manager in this model.
Mature
To support the strategic objectives of larger, more complex companies, the legal operations function could require the following roles:
Next, build the business case and focus on the return on the investment your business will receive from a legal operations function:
Cost savings on outside counsel spend
Identify the programs your legal operations team will implement and quantify the savings that will result. This could include the creation of preferred provider panels, greater use of RFPs and alternative fee arrangements, and better enforcement of billing policies. Pairing these programs with regular reviews with outside counsel of the service they
provide will result in better service levels and greater results for your business. A recent Thomson Reuters Legal Tracker study found that corporate legal departments with mature legal operations teams realize over two times as much savings in terms of invoice reductions as the Tracker community. While this is one of many areas of savings, the money saved in this area alone exceeds the cost of building a legal operations team.
More efficient use of resources
Think of the return to your company (in terms of FTEs and spending) as you make more data-driven decisions regarding:
Once the business case is approved, look for job descriptions for the roles you will be hiring. Here are some hints:
As you evaluate candidates, look for skills and attitude rather than restricting your search to individuals with a legal background. Many successful legal operations professionals do not have JDs, but they are skilled at financial analysis, information management, and change management.
To be successful, legal operations needs to be empowered and supported by the general counsel and executive leadership. Continually revisit the strategies you identified in Step 1 and the business case you developed in Step 3, reinforcing this vision to your organization. Setting these metrics and socializing the expectations within the company will be critical to providing your legal operations team the voice they need to implement the strategy.
Fundamentally, the purpose of legal operations is to act as a change agent within the legal department to drive continual improvement. Change can be hard, unless it is celebrated. Here are some ways to celebrate change:
As your legal operations team successfully implements the strategy, reinforce these messages within the organization:
Many companies have found that investing in a legal operations team is a self-funding activity due to the successful implementation of cost-savings initiatives. In addition, companies find they are able to implement more efficient processes, be better equipped to mitigate risk, and be more capable of providing the business intelligence that executives need to make strategic decisions. When legal operations teams are built on a solid foundation of planning, vision and execution, the results they deliver not only improve legal outcomes, they improve key business.
1 For evidence, just look at the growth in membership of two legal operations organizations: (1) the Corporate Legal Operations Consortium, which has grown in membership to over 180 companies and 230 individual members and quadrupled in size between May and October 2016, and (2) the Association of Corporate Counsel – Legal Operations Chapter, which already has over 400 members. For more information on these organizations, visit cloc.org and acc.com/legalops/
2 See metrocorpcounsel.com/articles/33745/backstory-%E2%80%9Cwatershed-year%E2%80%9D-legal-ops
3 An August 2016 survey of Legal Tracker clients found that less than half of large legal departments have a legal operations manager, director, or chief of staff.
4 cloc.org/what-is-legal-operations
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